IRS Clarifies Ability of Employers to Recover Mistaken HSA Contributions
Health Savings Accounts (HSAs) are tax-favored accounts that are designed to help eligible individuals participating in a high-deductible health plan save for medical expenses. Both the employer and the employee can contribute to an HSA up to a maximum annual contribution limit. The employee’s interest in the HSA balance is nonforfeitable.
The Information Letter also advises employers to maintain documentation to support their assertion that a mistaken contribution occurred. In addition, as a matter of procedure, the financial institution may also request to view the documentation prior to sending the funds back to the employer.